Hey Young Invincible, Can You Afford $6000?

Last week's Ezra Klein interview with Aaron Smith was a doozy. For those who don't know, Mr. Smith is the co-founder of Young Invincibles. The group works to educate and mobilize (their words, not mine) those between 18-34 years of age. For Ezzie it was the same mantra we always hear: rainbows, pots of gold, unicorns, warm and fuzzies, with a whole lot of "free". The reality is much different. Especially for those who are supposed to spread the wealth health risk and enroll in "affordable" insurance.

Much has been said about the so-called Young Invincibles and whether or not they will purchase insurance. A more glaring concern isn't whether they will purchase or what will be subsidized, but rather whether they can afford the high out-of-pocket maximums. Under PPACA the "catastrophic" plan for those 30 and under is alleged to have a deductible of $6000 (or close to it).

The problem for young invincibles isn't insurance premiums, it is their personal finances. Recently there was a post in the Wall Street Journal that showed:

Young people also are likely to have precarious finances and scant savings socked away for emergencies. When asked if they would be able, in one month, to come up with $2,000 for an unexpected expense such as car repairs, 49% of 18-34-year-old respondents said probably not. 

Further, these same invincibles have less discretionary income. Most don't carry insurance because they can't afford the premiums. Paying $100-$150 for the catastrophic plan isn't in the budget. The $20,000-$40,000 they make per year gets completely consumed by rent, car payment, student loans, groceries, cell phone, cable TV, utilities, and cheap beer.

As we approach the deadline of where we are going to force people to buy insurance the biggest question that will remain is: If I have a choice between paying a 1% tax on income OR 3% (minimum) of my income on premiums PLUS a huge out of pocket cost factor should I get sick which one will I choose?

I think you see which way this train is headed.